Varda Shine looks and sounds different from the standard De Beers executive. For starters, she’s a she, and female execs remain something of a rarity at the company. Second, she’s Israeli, an uncommon nationality in a company whose executives traditionally hail from London or South Africa.
But since the beginning of the year, Shine has been managing director of the Diamond Trading Company, which makes her one of the most powerful people there and, arguably, one of the most powerful people in the diamond industry, period. Among her responsibilities: dealing with sightholders, setting De Beers’ pricing and supply policies, and formulating U.S. marketing.
Shine got her start at De Beers working at the Israeli branch of the De Beers subsidiary Diamdel. In 1997, she transferred to London and the DTC, where she worked her way up to sales director and now managing director. In an exclusive interview, Shine spoke with JCK about current industry issues, including the U.S. market, the GIA scandal, and how she herself can be seen as a symbol of the new De Beers.
A lot of people think last year’s Christmas season was disappointing because the DTC spent less on American advertising, especially at Christmas. Is that true?
We have seen a lot of growth in the United States. When we look at the overall growth figures, America is half of the world’s diamond jewelry market, and we saw a healthy 5 to 6 percent growth [last year], and we’ll probably see growth again next year, though not at the same rate.
As far as marketing is concerned, we are looking at spreading our marketing money throughout the year. The weird thing about this industry is that 40 percent of global sales are done between Thanksgiving and Christmas, and that can be kind of risky. We want to look at what else can we do throughout the year, whether it be for Mother’s Day or Valentine’s Day.
Still, we haven’t been doing less marketing. If anything, our marketing spend is going up. In Vegas, we will be launching our “Journey” diamond jewelry campaign. We have already launched it to the trade, and people are very excited about it.
Some of the names rumored to be involved in the GIA lab scandal are big sightholders. Is De Beers willing to drop anyone implicated in the scandal?
Rumors are a great thing in this industry. I’m concerned that people have time for rumors, because that means they are not working. We are waiting for the feedback from our clients. Sightholders are subject to the procedures laid down by the Best Practice Principles and [not complying] could result in them losing their supply contract. The BPP is an on/off button. You are either compliant or not compliant.
The DTC has sent out two letters to sightholders asking if any are involved in the scandal. Have any admitted to being involved?
We just sent out a second batch of letters after we heard that more people were dropped. This is something that is very much ongoing and we are following it.
De Beers has said that even if it settles all of its U.S. legal problems, it won’t open an office here. Why not?
One of the main aims of our strategic review was to make sure that we are legally compliant in every jurisdiction that we work in. We have done business for the last 60 years without having people in the United States. I would personally love to come and see the Vegas show, but we don’t think that should change our business model.
A lot of sightholders launched marketing initiatives in the last five years, with mixed results. Now we see the DTC pick sightholders that are already established marketers, like Stuller. Is that the DTC’s direction?
When we first launched Supplier of Choice, there was confusion about what it meant. Does it mean that all the sightholders should start a brand? Over the last couple of years, sightholders have tried all sorts of different things. Some businesses have launched jewelry lines, others have gone into joint ventures, some have gone vertical, some are concentrating on what they do best—being a b-to-b and working with an established business like Tiffany. That’s meant all sorts of exciting opportunities for the consumers. Some of the initiatives are doing better than others, but we all have to recognize that building a brand takes time. Transformation of the diamond industry isn’t about taking everyone and turning them into clones. Transformation is about getting this industry to become more demand driven.
Overall, our strategy has been a success. For the past five years, we have grown demand for diamonds by 3.6 percent. When you look at the previous five years, the market declined by about 0.2 percent. So we have evidence that the transformation is working. These programs are driving growth, and they are not just driving growth for the sightholders, but the halo effect for the rest of the industry is huge.
Over the medium to long term we expect demand to be good. We are seeing vast discretionary income growth in China, India, and the Gulf, and, as countries get wealthier, we see them spending more on diamonds. We expect the United States to remain healthy in the long term, while the economic situation in Japan and Italy—two important consumer markets—is also improving.
How do you see the current state of the wholesale market? Many think Supplier of Choice has hurt industry middlemen.
Over the past five years people have understood Supplier of Choice to be antiwholesaler and antimiddleman. That’s not what it’s about. It’s about transforming the industry and ensuring that consumers have confidence in the product. It’s about everyone answering for themselves: “Why should someone buy from me, and not from the person next to me?”
We will only succeed in this industry if we understand what the consumer wants. That means providing exciting propositions for consumers and ensuring that they have full confidence in the product. A diamond represents important values and emotions, so consumers must be totally reassured that their diamonds have been ethically sourced.
The European Commission recently said De Beers can no longer buy from Alrosa, one of its major suppliers in the past. What impact will that have on the DTC?
It’s something we already factored into our planning. We have been talking with the European Commission about the Russian contract for several years, so this wasn’t completely news to us. Previously there was an agreement allowing us to buy $275 million a year, and now it’s down to zero. When you look at the De Beers group—all the new projects we have—we have two mines that will start producing, and by 2009 we will have Canadian goods filling in for the lack of Russian goods. I don’t think in the history of De Beers has there been as many mine projects as we have now.
You’re one of the few women in top positions at De Beers. In addition, you’re the first DTC leader without a South African or English accent. Do you think De Beers and the DTC are becoming more diverse?
Well, there are other women in top positions at De Beers, including Inge Zaamwani, the managing director of Namdeb [the joint De Beers–Namibia mining company]. But yes, De Beers is definitely becoming more diverse, and I think it’s fantastic. This is the only way to succeed in business today, because diverse people have diverse opinions. Being a woman in this industry is almost a no-brainer, because women are a majority of consumers for our product.
People don’t realize what kind of transformation is happening at the DTC. In the past few years, we have lost nearly 250 people. We feel the first chapter of our transformation has been successful, and now we are starting a new chapter. Both the DTC and the industry are in a very different place to where they were six years ago. The transformation of the DTC and industry is still happening. We have big ambitious goals we want to make happen. We want to become more professional. We need to be more agile and ahead of the competition.
With the shift in the business model we are starting to introduce new behavior and new culture. Things like the three-stone ring “Past, Present, Future” campaign; the Nakshatra brand in India; and “Trilogy” in Japan are examples of ideas we can generate when we focus on generating new demand. In China today, in the big cities, eight of 10 newlyweds buy diamonds for their wedding.
Today the DTC wants to be a service company. Can we use the information we have generated over the years to provide value-added services for people? We also want to work better with our producers.
For many years the DTC had a strong market position, so people didn’t have to learn new things, they didn’t need to think, they didn’t need to be on their toes. Now it’s a new world out there and we have competition. What’s nice about our market share going down is that we have competition, and when you have competition, you improve yourself.